UK Autumn Budget: Crypto Assets exempt from tax increases, but regulation and competitiveness still under follow.

In the latest autumn budget statement, UK Chancellor Rachel Reeves confirmed that Crypto Assets will be exempt from further taxation, but the government is pushing for stricter reporting and regulatory measures to enhance industry Compliance. Reeves announced that the income tax threshold will remain frozen, while new tax measures will be implemented on dividends, savings, and property income, and there will be limits on pension salary sacrifice benefits.

The compliance officer for a certain CEX in the UK, Azaria Nukajam, welcomed this, believing that Crypto Assets should be treated on par with other asset classes, which is beneficial for their long-term viability as an alternative investment option. However, she also pointed out that new regulations, including the Crypto Assets Act, HMRC tax warnings, and the soon-to-be-implemented Crypto Assets Reporting Framework (CARF), indicate that the UK is moving towards stricter tax transparency and regulation to close potential loopholes.

Nukajam stated that this more regulated environment helps to improve consumer confidence, attract institutional investors, and ensure that Crypto Assets gradually integrate into the mainstream financial system in the UK. Despite last year's capital gains tax reform raising the Crypto Assets tax rate from 10%-20% to 18%-24%, the UK still has an advantage compared to competitors such as Spain and France, but she suggested adopting Germany's long-term holding tax exemption model to enhance attractiveness.

Industry insiders have raised concerns about the competitiveness of the UK. Ben Cousens, co-founder of Antidote, believes that while the budget signals support for entrepreneurship, it does not sufficiently incentivize entrepreneurs to remain and develop locally. Richard Muirhead, co-founder of Fabric Ventures, points out that the budget may force tech startups to move to countries with more favorable regulatory and tax conditions, undermining the UK’s advantage in the global talent competition. Adam Simons, Chief Strategy Officer of Radix, also warns that the FCA's “hostile attitude” towards Crypto Assets may lead to a talent drain, weakening the UK's traditional advantage as a bridge connecting the European and American markets.

Overall, the UK is regulating the Crypto Assets market through a stricter regulatory framework while maintaining favorable tax policies, but concerns about competitiveness and talent drainage in the industry are still on the rise. (The Block)